In August 2000, Intel briefly had a market value of $509 billion (more than $930 billion in 2024 dollars). It was the most valuable public company and the “platform leader” in the personal computer industry along with Microsoft. At the start of December 2024, Intel’s value stood at $104 billion (after falling under $100 billion), far below Microsoft ($3.1 trillion) and Apple ($3.6 trillion). Nvidia ($3.4 trillion) became the new leader in semiconductors, rivaling Apple in market value. Intel also had fallen behind long-time rival AMD ($222 billion) as well as Broadcom ($176 billion), Qualcomm ($174 billion), and ARM ($141 billion). Then we have Taiwan Semiconductor Manufacturing Co., known as TSMC, valued at $958 billion.
Intel microprocessors, also called central processing units (CPUs), have powered DOS-based and then Windows PCs since IBM introduced its personal computer in 1981. Intel later used this architecture to dominate datacenter servers. However, PC sales have matured, and datacenters are increasingly running generative AI software on Nvidia graphical processing units (GPUs). In October 2024, Intel announced huge restructuring charges and the largest quarterly loss in the company’s history—$16.6 billion—as well as layoffs of 16,500 employees.11 Intel also canceled its dividend and fielded at least one acquisition offer.2 In November 2024, Nvidia replaced Intel in the Dow Jones Stock Index.5
How did Intel’s “fall from grace” happen? What should managers learn from this story? I have followed Intel as well as Microsoft and Apple closely since the early 1990s. The business media and several former Intel directors also have weighed in on Intel’s struggle and options.21 What happened to Intel falls into two “buckets.” One involves the challenge of dominating a highly profitable market without having the foresight, ability, or flexibility to adapt to new technologies and customers (for example, mobile and AI) as they emerged. A second relates to the consequences of maintaining a strategic commitment (such as in-house manufacturing) that has become outdated. Intel’s determination to keep making its own microprocessors had been an advantage, but it became a liability as advanced semiconductor manufacturing evolved into a highly specialized capability, separable from design.